The first step’s been taken: introducing carbon pricing and engineering an long-term upward price-expectation slope. The money generated from this can fertilize innovation and application of low-emission technologies.

Application of these technologies creates demand for networks to deliver this low-emission energy to consumers. Downstream pricing, in turn, can be weighted by distance, availability, network congestion and carbon load.

The result will be market efficiencies in production (low emission energy), transportation (grids and networks), consumption (fuel switching) and innovation (through better price signals).

The biggest one is removal of surplus carbon emission permits from the global benchmark European Union Emissions Trading Scheme (EU ETS). This will occurbetween now and 2020.

The effect? A doubling of carbon prices to $20 per tonne by 2020 and a tripling of them to $30-40 per tonne by 2030.

While traded carbon prices are expected to remain weak until around 2020, they’re expected to rise to $30-50 by 2030 and climb further after that.Sources: World Bank, Carbon Tracker, Synapse, Point Carbon, ICIS, US General Accounting Office.

This equates to an annual rise of 8-11% per year over the next 15 years.

However, even with this rise, anticipated 2030 carbon prices still will lag the US General Accounting Office (GAO’)’s estimated $50 per tonne ‘social’ (ie ‘negative externality) cost of carbon.

This $6.9 trillion represents a subsidy of $172 per tonne of global carbon emissions.

This $6.9 trillion represents an annual transfer of $862 for each of the world’s roughly 8 billion people, rich or poor, to the fossil fuel industry. It amounts to a transfer of just under 10% of global median household income.

Were those trillions a national economy, they’d be the world’s third largest, lagging only the US ($17 trillion) and China ($10 trillion). They would be larger than Japan’s ($5 trillion), Germany’s ($4 trillion) or the UK’s ($3 trillion ).

Spent elsewhere, what could $6.9 trillion a year buy?

Global consultancy McKinsey estimates all the technologies need to eliminate 80% of global carbon emissions are economically viable at carbon prices of $40 per tonne or less. Only carbon capture and storage costs more.

More incredibly, according to McKinsey roughly a third of global carbon emissions from energy can be eliminated at negative cost,ie better than free!

McKinsey’s findings are reinforced by corporate ‘shadow’ carbon prices now used to (among other things) evaluate energy market capital investment.

Matching the corporate names below to the energy sources they’re involved in, they parallel McKinsey’s findings. Conclusion: the Big End of town gets the carbon story.

Eighty percent of global carbon emissions could be eliminated for under $40 per tonne. Nearly a third could be eliminated by means that would actually return money.Source: “Pathways to a Low-Carbon Economy,” McKinsey 2009

McKinsey’s findings are reinforced by corporate ‘shadow’ carbon prices now used to (among other things) evaluate energy market capital investment.

Matching the corporate names below to the energy sources they’re involved in, they parallel McKinsey’s findings. Conclusion: the Big End of town gets the carbon story.

Corporate investment ‘shadow’ carbon prices for ivestment increasingly correspond to those forecast by by private researchers.Source: “Putting a Price on Risk:Carbon Pricing in the Corporate World,”Carbon Disclosure Project, 2015

Above, we analyzed the upstream market (ie energy production).

What about midstream (energy transport, like power lines, grids and pipelines) and downstream (end point energy consumption)?

Regarding the midstream, my research organizationGrenatec estimates a ubiquitous, multi-fuel, ‘future proof’ transmission (electricity, gas, hydrogen) built out across in ‘Asia’ (our geographic focus) infrastructure could be built by 2050 for about $15 per tonne of carbon emissions, or a few cents per kilowatt hour delivered.

Admittedly, that kind of estimate is little more than a multi-variable thumbnail estimate.However, unrelated, independently-reached estimates by others have yielded similar numbers.

Grenatec argues that existing infrastructure projects in Asia (and elsewhere) in electricity grids, pipeline and fiber optics need to be better coordinated and integrated to provide the multi-faceted energy, data and trading and storage markets of tomorrow.

Now’s the time to do this. The potential for future integrated networks in Asia is great. But greater coordination is needed. This will save money through eliminating duplication.